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Block (SQ) Outpaces Stock Market Gains: What You Should Know

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Block (SQ) closed the most recent trading day at $58.51, moving +1.74% from the previous trading session. This move outpaced the S&P 500's daily gain of 0.22%. Meanwhile, the Dow lost 0.13%, and the Nasdaq, a tech-heavy index, added 0.2%.

Coming into today, shares of the mobile payments services provider had lost 34% in the past month. In that same time, the Business Services sector lost 7.62%, while the S&P 500 lost 8.32%.

Block will be looking to display strength as it nears its next earnings release. The company is expected to report EPS of $0.18, down 72.73% from the prior-year quarter. Meanwhile, the Zacks Consensus Estimate for revenue is projecting net sales of $4.4 billion, down 6.1% from the year-ago period.

Looking at the full year, our Zacks Consensus Estimates suggest analysts are expecting earnings of $0.90 per share and revenue of $18 billion. These totals would mark changes of -47.37% and +1.91%, respectively, from last year.

It is also important to note the recent changes to analyst estimates for Block. Recent revisions tend to reflect the latest near-term business trends. As a result, we can interpret positive estimate revisions as a good sign for the company's business outlook.

Our research shows that these estimate changes are directly correlated with near-term stock prices. We developed the Zacks Rank to capitalize on this phenomenon. Our system takes these estimate changes into account and delivers a clear, actionable rating model.

The Zacks Rank system, which ranges from #1 (Strong Buy) to #5 (Strong Sell), has an impressive outside-audited track record of outperformance, with #1 stocks generating an average annual return of +25% since 1988. Within the past 30 days, our consensus EPS projection has moved 3.74% lower. Block currently has a Zacks Rank of #3 (Hold).

Investors should also note Block's current valuation metrics, including its Forward P/E ratio of 63.95. This valuation marks a premium compared to its industry's average Forward P/E of 19.27.

It is also worth noting that SQ currently has a PEG ratio of 4.49. The PEG ratio is similar to the widely-used P/E ratio, but this metric also takes the company's expected earnings growth rate into account. SQ's industry had an average PEG ratio of 1.7 as of yesterday's close.

The Technology Services industry is part of the Business Services sector. This industry currently has a Zacks Industry Rank of 177, which puts it in the bottom 31% of all 250+ industries.

The Zacks Industry Rank gauges the strength of our individual industry groups by measuring the average Zacks Rank of the individual stocks within the groups. Our research shows that the top 50% rated industries outperform the bottom half by a factor of 2 to 1.

Make sure to utilize Zacks.com to follow all of these stock-moving metrics, and more, in the coming trading sessions.

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